WESTERN CAPE – Cape Town residents across all income brackets are struggling with housing affordability as municipal rates and taxes continue to rise, according to Leon van Zyl, chairperson of the Western Cape Property Development Forum (WCPDF).

In the forum’s latest newsletter addressing the housing crisis, Van Zyl warned that affordability challenges, once confined to lower income groups, are now affecting the middle class as property prices soar throughout the region.

“In response, some commentators are calling for price controls and land-value taxation to cross-subsidise housing. Others argue that short-term rentals are reducing available housing stock,” he writes.

“Still others blame rising operational costs, particularly higher municipal rates and taxes, and point to an increasingly bloated public administration as the root cause.”

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Demand meets supply

But housing affordability is not unique to Cape Town; price escalations in surrounding towns such as Stellenbosch, Paarl and even as far afield as George and Mossel Bay confirm that affordability is a broader regional challenge, driven by both demand and supply challenges.

The Western Cape’s appeal as an internationally recognised destination is driving healthy market demand.

Van Zyl cited the region’s natural beauty, superior governance compared to other parts of South Africa, and its attractiveness to international companies seeking an African presence, such as Amazon.

“And, measured on an international scale, the Cape is affordable when compared to other international addresses. Plus, with the message of good governance and a better life, comes the message of potential employment opportunities, leading to mass semigration across all levels of income.”

However, supply-side challenges are exacerbating the crisis.

Despite the the province’s reputation for good governance, Van Zyl criticised excessive red tape and associated costs.

“Many would agree that the Western Cape is exceptionally good at crossing every ‘t’ and dotting every ‘i’ when it comes to statutory approvals for new development. This creates the perception that the governing culture is one of: ‘It’s easier to say no than to say yes’,” he observes.

“With public sector salaries and job security often exceeding those in the private sector, bureaucrats are frequently criticised for lack of urgency in delivery, prioritising clean audits over implementation. However, since clean audits seem to be the political differentiator celebrated by political leadership, can one blame the bureaucrats for the political culture of clean audit above delivery? Red tape is a real challenge in the Cape, and the cost of time is directly reflected in the cost of housing.”

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Land availability remains another significant cost driver, historically addressed through greenfield expansion, according to Van Zyl.

And while municipalities now advocate for densification as a result of operational cost concerns, political resistance from existing residents poses obstacles.

“Municipalities now argue for densification, since outward expansion brings additional municipal operational cost implications. Changes in technology and resultant cost reductions, specifically in private electricity generation and water treatment, challenges this argument to some extent, but one must also remember that these advances cause municipalities to lose their monopoly on utility provision,” he notes.

The obvious solution to land availability is to start with releasing state-owned land, followed by a critical review of why densification does not naturally occur on privately-owned land.

“Although the City of Cape Town has made progress in releasing surplus land, ensuring that it is ultimately used for affordable housing remains difficult. One of the biggest obstacles is political resistance from existing voters who prefer to preserve the status quo. Despite its liberal reputation, the Cape is far more conservative than most would care to admit,” he writes.

Added pressure

Building material costs further compound the problem, as few materials are produced locally in the Western Cape. “Materials delivered at scale in Gauteng are broken into smaller quantities for Cape projects, with transport costs and markups added along the way,” Van Zyl explains.

Combined with higher labour costs, stricter site controls and rising fuel expenses, construction costs in the Western Cape significantly exceed those in other provinces.

Rather than seeking simple solutions, Van Zyl called for a multi-faceted approach encompassing land availability, statutory rights reform, services provision, finance strategies and building cost management.

“Housing activists often search for the silver bullet to address housing affordability, but none exist,” he concludes, dismissing suggestions that addressing short-term rentals or implementing land-value capture would provide magical solutions.

The forum chairperson’s letter highlights the complex interplay of factors contributing to the Western Cape’s housing crisis, suggesting that sustainable solutions will require coordinated action across multiple fronts rather than piecemeal interventions.